Kalshi Faces $60M Clawback as States Target Prediction Markets

Utah officials are seeking to force Kalshi and two Susquehanna trading companies to surrender between $30 million and $60 million in profits, according to a civil lawsuit filed Tuesday by Utah Attorney General Derek Brown. The state alleges the prediction market platform illegally offered event contracts to more than 32,000 residents since 2024.

The financial clawback demand marks an escalation beyond the cease-and-desist orders that have characterized most state-level enforcement against prediction markets. Brown stated at a press briefing that he petitioned a court to compel the return of funds, arguing the operation caused “significant and substantial ongoing harm to a significant number of Utahns.”

For users in states moving to classify these platforms as illegal gambling operations, the immediate question is whether deposited funds or open positions face disruption. The Utah filing specifically targets sports, elections, politics, culture, and entertainment bets.

Kalshi has maintained its operations fall under federal jurisdiction. Spokesperson Jacki McGavick told Cointelegraph that the company operates as “a federally regulated financial exchange, like the stock market,” overseen by the US Commodity Futures Trading Commission (CFTC). “No single state should have a veto over it,” McGavick said, adding that the state court action does not affect the company’s ongoing federal litigation.

The platform’s legal strategy relies on federal preemption — the argument that CFTC oversight supersedes state gambling statutes. A Utah judge rejected that argument in August. An appellate court subsequently denied Kalshi’s request for an injunction in September, blocking the platform from operating in the state during its appeal.

Utah’s aggressive posture reflects a widening regulatory fracture. Civil suits have been filed by authorities in Michigan, Ohio, Kentucky, Nevada, Massachusetts, Wisconsin, and New York against one or more prediction market companies, including rival platform Polymarket. Arizona remains the only state pursuing criminal charges against Kalshi.

Professional sports leagues have entered the fight. The NFL backed New Jersey authorities in a petition to the US Supreme Court over Kalshi’s sports betting contracts, according to related reporting. The high court is currently weighing whether to accept the New Jersey case, which could establish binding precedent on whether state gambling regulators or the CFTC hold authority over event contracts.

Until the Supreme Court acts, prediction market firms face a patchwork of state-level restrictions. The CFTC claims “exclusive jurisdiction” over the contracts, but lower courts in multiple states have refused to halt local enforcement actions pending federal resolution.